PLIGHT, 27 January 1961 105
H''VER-FLY: This photograph, from "Boeing Magazine," depicts the
Bring Vertol GETOL (ground-effect take-off and landing) vehicle
(tierred to in "Flight" for December 2. Using this six-foot-span model,
Vi'tol are conducting a feasibility study for the United States Army
Transportation Research Command at Fort Eustis, Virginia
IN BRIEF
The MoA announce the appointment of Mr D. E. Morris, MBE,C' jef Superintendent of RAE Bedford, as Director-General of Aircraft
Research and Development (RAF) in succession to Mr L. Boddington,CBE, who has resigned from the public service.
Construction of a Russian hovercraft designed in Leningrad is to start
this year. It will be powered by "aircraft engines," but no details have
been given other than that it should carry 40 passengers and have a
speed of about 30 m.p.h.
A team from No 5 Group, Royal Observer Corps, Enfield, Middx,won the Silver Hurricane Trophy for the team with the highest aggre-
gate marks at the 14th All-England Recognition Contest, held by theAircraft Recognition Society in London last Saturday, scoring 100 out
of a possible 105 marks. For the first time, the contest was held inthe new RAeS lecture hall.
Airwork Services Ltd, sole UK distributors for the Cessna range,have appointed four regional dealers who will be responsible to them
for the sales, servicing and spares of these aircraft. The Midlands areais being covered by McAlpine's aviation division, based at Luton Aero-
drome, Beds; East Anglia by Mr N. A. Rogers of W. H. & S. J. Rogers(Engineering) Ltd, Gt Barford, Beds; and the north of England by
Capt W. Westoby of Westair at Blackpool. In Scodand, AirworkServices have their own representatives at Perth, Airwork Services
Training.
The fourth Trenchard Memorial Lecture, at the RAF TechnicalCollege, Henlow, at 8 p.m. on February 6, will be on The Nuclear
Deterrent and is being given by Prof N. H. Gibbs, MA, DPhil, ChicheleProfessor of the History of War in the University of Oxford.
Mr Henry Racine-Jaques, whose flying experience began at Hendonin 1910 and who qualified for his RAeC aviator's certificate at Brooklands
in May 1914, died at Narrabeen, NSW, Australia, recendy at the ageof 72. He was associated with Howard Flanders in the design of the
Flanders Monoplane and served in the First World War as a pilotand observer in the RFC.
BRITAIN'S AIRPORT LOSSES—£5m or £13m?
TF ever there was proof that the time has come for British airportsA to be prised away from the Ministry of Aviation and brought
under the control of some sort of autonomous management, it isto be found in the recently published accounts and balance sheets
of Government "trading or commercial services" for 1959-60.*A powerful reason for making a drastic change is the magnitude
of even the published loss figure, £5|m, in the year reviewed.But any truly realistic loss is considerably higher than this—
perhaps, as will be shown, as high as £13 million. Meanwhile,after over a decade of prodding from the outside world, the
Ministry and its predecessors have—on their own admission—been unable to develop a satisfactory system of accounting for
Britain's airports.
Taking first the published accounts for 1959-60, these show thatoverall revenues (£7.4m) fell short of expenses (£12.9m) by
£5|m. Landing fees at £3.1m were the largest single source ofincome. The next most important source comprised the Ministry's
various tenants and concessionaires who, in one way and another,contributed £2.2m. Apron services and passenger service charges
yielded a further £fm and £im respectively.
Looking next at the expenditure side of the account, staff costsswallowed up just over £4m. Interest on capital was second on
the list at £2|m, followed by depreciation and maintenance at£1.7m and £1.2m respectively. The only other significant single
items were administrative overheads (£|m) and power and watersupply (over £jm).
With an annual income of almost £5m, London Heathrow—as London Airport is now officially known—accounted for two-
thirds of total MoA airport revenues. In contrast, it accountedfor less than half of the total expenditure (£6m as against £13m).
The most expensive of the other airports were Gatwick (£1.4m)and Prestwick (£1.2m). Indeed, Gatwick's costs were so high in
relation to income that it achieved the dubious distinction ofI losing over one million pounds (only slightly less than Heathrow)
in its first full year of operation.
Another way to compare expenditure is on a per-passenger basis.This shows Gatwick, Prestwick and the Highlands-and-Islands
airports working out at £4 to £5 per passenger; Heathrow at about30s; and the 15 provincial airports at only £1.
Although the loss of £5^m on revenues of under £7^m is some-thing of a financial achievement, the true position is even more
disturbing. In the first place, interest on capital is not based onthe total amount of money that the State has poured into airports,
but only on the depreciated value of fixed assets plus workingcapital. This means in effect that annual losses are treated as a
write-off. If the airports, like some other nationalized industries,had to continue to pay interest on all the money provided by die
State—whether or not it had been dissipated in the form of losses—then the annual interest charge in 1959-60 could well have been
£5m rather than £2|m.
The next curious item is depreciation. This stood at £1.7m in1959-60 and was almost entirely identified with runways, taxiways,
aprons and—to a lesser extent—permanent buildings. The depre-dation period for these items was taken at no less than 50 years.
ading Accounts and Balance Sheets, 1959-60," HM StationeryOffice, London, price 7s 6d.
When it is remembered that a main runway at Heathrow is alreadyout of commission, and also diat die obsolescence rate of runways
has always been remarkably high in the past, then a period of25 years would probably be seen to be more realistic. Similarly,
it is found that "temporary buildings" are being depreciated over15 years! Taking an informed guess, it would probably be not
unfair to suggest that £3m rather than £1.7m would be a morerealistic figure for total depreciation.
The next biggest item, maintenance, is also puzzling. Majorwork—primarily the resurfacing of runways—is not charged
against the year in which expenditure happened to be incurred,but is averaged (rightly) over a number of years. Unfortunately, no
clue is given as to the mathematics of this averaging process, andso it is probably fair to assume that the tendency is to make affairs
look better rather than worse, by choosing a longish period overwhich to spread the cost.
The final item that could well have been understated is overheadadministration. A hint on the extent of this is the value shown in
the accounts of under £lm, whereas the total overhead budget forthe Controller of Ground Services was much higher. An outsider
would with some justification think that the majority rather thanthe minority of this last figure should be attributable to airports.
Adding together these four suspect items—interest on capital,depreciation, maintenance, and overhead administration—it could
well be that more realistic accounting methods would show anaddition to the declared deficit of a further £5m at least.
But this would not be all. In the previous year, 1958-59, theComptroller and Auditor-General discovered that the Ministry's
airport figures did not take into account the loss on providingen route facilities to civil aircraft. In that year the Treasury were
told that these facilities had cost £2.7m. No reference is madeto this item in the 1959-60 accounts, but it can be safely assumed
to be at least £3m. As these facilities are provided by the aero-drome authorities, it would again be necessary to add this to the
overall deficit incurred in the operation of MoA airports. Thusit can be shown that the real loss on Ministry airports in 1959-60
was certainly nearer £13m than £5m.
That it is possible for Parliament and the taxpayer to be misledto the extent of at least £8m is, of course, a severe indictment of
the Ministry's accounting methods. But just as disturbing arethe efforts (a) to allocate overhead charges (such as interest on
capital) to individual airports in an attempt to show where theloss was incurred, and (b) to distinguish in the case of Heathrow,
Gatwick and Prestwick between the four main airport functions—aircraft handling, passenger handling, provision of technical
services and provision of accommodation—in an effort to pinpointthe losses of these airports. Particularly in the case of (b), the
methods of allocation used by the Ministry are so suspect thatthe published figures are virtually meaningless. In this regard,
the Comptroller and Auditor-General has noted that the Ministryare not satisfied with present methods and are "taking steps to
introduce improved costing and accounting systems." When Flightrecalls that it was as far back as 1949 that the Comptroller first
reported that the Ministry's aerodrome accounts were not capableof being audited, there is justification for believing that an auto-
nomous British Airports Corporation would mean improvedaccounting as well as improved accountability.